Scorn on the Bayou The Political Economics of Katrina

For two
weeks since hurricane Katrina made landfall, Americas media have
been presenting startling images of an impoverished New Orleans.
Unfortunately, many journalists have been as inaccurate with their
economic assessments of this region as they were in estimating how
much time it would take to drain all the water from the city.

While cover stories at TIME and U.S. News
and World Report this week focused on the flawed response to Katrina
and who was to blame, Newsweeks senior editor, Jonathan Alter,
presented an array of inaccurate statistics to exaggerate
socio-economic problems nationally as well as in the
hurricane-affected areas of New Orleans.

In his
cover story, The Other America, Alter painted a picture of
life in this country, and on the Bayou, that is substantially worse
than reality: But this disaster may offer a chance to start a
skirmish, or at least make Washington think harder about why part of
the richest country on earth looks like the Third World.

Having set the tone, Alter offered some
dubious and misleading conclusions about Americas poverty rate:
But after a decade of improvement in the 1990s, poverty in America
is actually getting worse. A rising tide of economic growth is no
longer lifting all boats. For the first time in half a century, the
third year of a recovery (2004) also saw an increase in poverty.

As recently
reported by the Business & Media Institute, the 2004 Census Bureau
survey indicated that poverty in America is actually lower than the
average rate achieved during the decade of the 90s. In addition,
even though the early 90s recession ended in the first quarter of
91, poverty actually continued to rise that year, as well as in
1992 and 1993 when it peaked at 15.1 percent. This means that the
current period is not the first time in five decades that poverty
has increased for three consecutive years into a recovery.

Alter didnt do his homework on Louisianas
poverty, either. Even though the nation has seen its poverty rate
increase from 2000 to 2004, Louisiana is one of the few states where
poverty decreased in the past four years. In fact, a 17.2 percent
rate of poverty in 2000 declined to 16.7 percent in 2004.

Whos poor?

Next, Alter made unsupportable claims about
how poverty in America compares with other countries across the
globe: The poverty rate, 12.7 percent, is a controversial
measurement, in part because it doesn't include some supplemental
programs. But it's the highest in the developed world and more than
twice as high as in most other industrialized countries, which all
strike a more generous social contract with their weakest citizens.

Curiously, he didnt include specifics for
which countries in the developed world supposedly have a lower
poverty rate than America, or what the poverty line is in such
countries. For comparison purposes, the World Bank calculates
international poverty two ways: people who live on less than $1 per
day, and people who live on less than $2. This equates to $365 and
$730 annually. If America determined its poor using these
benchmarks, our poverty rate would be close to zero. Instead, in the
most recent survey, the poverty line for an individual in our
country is income less than $9,060 per year, or 12 to 24 times what
is considered poor by the World Bank.

Further contradicting Alters international
poverty comparison is Great Britain, a country that is certainly
developed and industrialized. According to the
New Policy Institute, 12.4 million United Kingdom residents fell
below that nations poverty line in the most recent survey done in
2002-2003. With a population of 60 million, this is a poverty rate
of more than 20 percent, which is significantly higher than
Americas, and, coincidentally, is also higher than Louisianas.
Within this 12.4 million, it would be interesting to find out what
percentage have cars, indoor plumbing, phones, microwaves,
televisions, and DVD players like much of Americas poor.

Louisianas Reality

Yet, Alters economic assessments of
Louisiana were even worse: The primary economic problem is not
unemployment but low wages for workers of all races. With unions
weakened and a minimum-wage increase not on the GOP agenda, wages
have not kept pace with the cost of living, except at the top.

According to the Louisiana
Department of Labor, the average weekly wage for employees in
that state has gone from $565 in the fourth quarter of 2000 to $658
in the fourth quarter of 2004, a 16.5 percent increase. This
compares to an average national increase of 8.5 percent during the
same period. Louisianas 2004 average annual wage of $34,216 is 1
percent higher than the nations average of $33,846.

This means that workers in Louisiana have
seen their wages increase at almost twice the rate of the rest of
the country in the past four years. In addition, as the Consumer
Price Index has risen by 9.2 percent during this period, wages in
this state are growing 79 percent faster than inflation contrary
to Alters assertions.

In the area in and around the city of New
Orleans, the picture is even better. From the end of 2000 to the end
of 2004, average weekly wages rose from $607 to $714, a 17.6 percent
increase, or more than $5,500 per year. As a result of this wage
growth, workers in this area earn 8.5 percent more than the national
average. This means that since Bush was first inaugurated, workers
in the most hurricane-impacted areas of Louisiana have seen their
wages increase more than twice as fast as the rest of the nation. In
fact, this part of the country has been experiencing a stronger
economic recovery under the current administration than most of
America.

Also counter to the bearish tone of
Newsweeks article is how well the poorest areas of this Gulf Coast
region fare compared to the wealthiest. For instance, the parishes
in the New Orleans area with the lowest income levels, St. Bernard
and St. Tammany, both saw average wage gains of 25 and 17 percent
respectively since the end of 2000, or triple and double the rate of
the rest of the nation. By contrast, the wealthiest parish of St.
Charles only experienced an 11 percent average wage gain. So much
for tax cuts only helping the rich. Finally, the two poorest
parishes have average weekly incomes that are only 10 and 8 percent
lower than the national average, respectively.

Recent economic data for the areas in
Louisiana most hurt by Katrina give a significantly brighter picture
of this region than what was portrayed by Jonathan Alter in his most
recent article, and what has largely been reported by Americas
press the past two weeks.

Noel Sheppard is an economist, business owner, and contributing
writer to the Business & Media Institute. He is also member of the Media
Research Centers NewBusters squad. Noel welcomes your feedback at
slep@danvillebc.com.

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